Technology rules for RBS. Investment in technology, in a cost-cutting drive, appears to be the bank's new strategyConsidering the wave of bad publicity surrounding RBS in recent years, would you be surprised to hear that it is on a major recruitment drive? It certainly is, and this time it is not recruiting for traditional banking roles. Read on.
It seems that recruiting for the bottom line is not a priority for the investment bank. Credit sales, rating and investment jobs are not on the recruitment agenda. Instead, the bank is undertaking a major restructuring of its back office functions, namely technology.
Technology rules for RBS. Investment in technology, in a cost-cutting drive, appears to be the bank’s new strategy. However, technology costs money and if you are cost-cutting what do you do? Of course you get cheap labour. And where can you find this pool of people? Why India of course.
Recruiting from overseas is nothing new and the fashion has come and gone many times. So the reasons behind RBS’s decision are not unique. What is interesting is why now?
The seriousness of the situation has even warranted the removal of the corporate investment section from the careers page on the firm’s website.
Credit sales and trading have dropped 81 per cent in the past two years but investment banking costs have risen at an alarming rate and the corporate and investment bank (CIB) made an operating loss of £270m in the third quarter.
The investment costs have not risen due to front office hiring so it is unclear where the expenses are coming from. It doesn’t take much to realise that this doesn’t make sense. One thing is sure and that is the fact that costs need to come down and an option is to reduce recruiting activity, or if you do recruit you make it inexpensive. Outsourcing technology recruitment overseas appears to be the future for RBS.
RBS CEO Ross McEwan has confirmed that back office cost-cutting is the way forward. The bank is engaged in a major IT programme and hiring technologists is essential. But will low-priced technology staff cause problems or not?
Unlike Deutsche bank which decided that cheap overseas labour was just not worth it, RBS has advertised some 220 IT vacancies which are paying an average of £13k per annum in its technology operation in Gurgayon, Haryana near New Delhi. Contrast this with the 140 front office jobs required in London, despite the fact that RBS has been reducing headcount from its CIB.
It will be interesting to see whether this new overseas recruitment strategy will haunt RBS and bring another bout of unwanted publicity. Or not.
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